Turn cautious too soon rather than wait until its too late. In addition, marks writing that asset prices are high, quote, across the board. That there are few bargains to be had and that a growing number of investors are embracing increasing risks to achieve their returns. Here to discuss that and debate the memo, the stocks which are moving today at this hour, pete s na jaaron. Also with us is cnns leslie pi pickert going through this memo. It is from oak trees howard marks questioning whether stocks are too expensive. Jim, he says the s p 500 selling at 25 times trailing 12 month earnings compared to a longterm median of 15 he mentions the schiller cape ratio. Almost 30 versus a historic median of 15 right. Is he right he is right in concept. Now this is not bubble territory. Stocks are a little expensive. The market overall is a little expensive. I look at some of these industrial names as earnings come out, trading in the mid 20s for a multiple thats a little bit high heres the thing he is right in the concept i think hes wrong to execute right now. The reason is because of this low volatility that weve got right now. Youre seeing this market bubble higher almost every day by a little bit thats a beautiful situation that al louts ylows you to cont ride it. Then you can say get out i think you run a real risk of leaving 10 on the table. I think its better to turn cautious im quoting. Its better to turn cautious too soon and thus perhaps under perform for a while rather than too late after the down slide has begun making it hard to cut risks. You want to wait until the fires in his face. No, no, im not saying that listen, to what you just said, the difficulty of exiting isnt that difficult what you have to do is be prepared i think thats what hes saying, right . I know what stocks i want to sell there are stocks that are past my sell point and im letting them to continue to burble higher Marathon Petroleum is one weve talked about in the last week. It had a decent, not great but decent Earnings Report today it continues to trickle higher when i see that thing down meaningfully two days in a row, past my sell signal, then i get out. Be prepared. Its not difficult to exit this market its not difficult to take risk. Pete, jim mentions complacency. Yes. The vix, howard marks is talking about that, too. Says the bottom line is that last weeks vix was the lowest in its 27 year history matching a level seen only once before. Right. The index was last this low when bill clinton took office when there was peace in the world, faster Economic Growth and a small deficit. Should people be as complacent now as they were then . The answer is why not use all the tools that weve got in front of us. The reality is, have people become complacent . Probably volatilities are at a level where why wouldnt you want to own that protection, scott we talk about it each and every day. Weve been talking about it since volatility index got to 12 you know what, pete, youre wasting your money by protecting thats okay. If im protecting and the market is going up as fast as it is, that protection thats costing me very few, maybe a percent or 2, the market is up 10, 11, 12, 14 , i think ill take that risk every day and ive got protection if the storm comes, if what youre talking about we get meaningful pull backs, im still in the market but ive got protection to the down side. John, what do you make of this marks memo . Id like to photocopy it and sign it and send it out as my quarterly letter its everything i believe in right now. I believe the price is too high. I believe volatility is too low. Volatility is being set up because of thoughts like the one jim has. Everything verbal is up. Markets walk upstairs and jump out the window right now were at the top of the stairs in my opinion, and the selling of volatility, which is reflection of complacency, is something that is kind of layered nitroglycerin on top of this market. Selling a volatility has become an alternative income strategy which is completely insane where people are out there selling premiums and the najerians know how volatile that is its not going to be as easy to sell your stocks as jim thinks it is. He takes on the fangs in some respects which well get to in a moment he doesnt say that stocks are too high, he simply points out sort of where the valuations are and questions are we at lofty levels. You know, we are at lofty levels on any historical measure, were definitely at lofty measures to say its not a bubble compared to 1930s, compare it to 2000, 2007 on so he many different metrics were on those levels. John, couldnt you say loftier levels somebody could say we were at lofty levels 100 points ago in the s p, 200 points ago. There isnt a reason for stocks to go down. Its a measure of how far they can go down. Weve walked up 18 flights of stairs instead of one flight of stairs when we jump out that window, its a lot further to fall. Were saying this is expensive. What im hearing you say, john, its very expensive. Im going to put those words in your mouth if i look at the estimates on the s p 500, depending who you talk to, 130, 135 a share where does that put us somewhere 18. 5, 19. 5 times ill grant you thats not cheap. Ill grant you its a little bit expensive, but i dont think this is bubble territory i want to make this one distinction. We could have a correction at any time all of us know that. And i think and i hope thats what howard marks is talking about. I dont see the conditions for a real rip your face off, sorry, leslie, theres no prediction that would predict that. He talks about the fangs which everybody seems to be enamored with. He says, among other things, bull markets are often marked by an anointment of a single group of stocks as the greatest and the attractive legend around that group is among the factors that support the bull market you can certainly make that case in the current iteration, these attributes are being apply to a small group of stocks called the faangs, which he calls the super stocks. What happened, all the investors who are missing out the rally are saying ill buy the etf, ill go passive and if you just look at the valuations of these stocks, some of those faangs arent making money the issue is right now we havent had a correction for 12 months what weve had is 5 everybody is waiting for that pull back. Well, his point though, leslie, is sort of the higher they go up based on what could end up being some suspect metrics, no one thinks that either any of these stocks on the five on this list are dogs, are duds in any way, but if they continue to go higher on what he sees as sort of suspect metrics, as they continue to climb and climb and climb and climb and climb, the harder they potentially fall if you do get a correction of magnitude. Exactly he points to losses. The fact that a lot of these companies are not profitable, not rising on the traditional fundamental metrics that you learn about when youre doing discounted cash flows. These are companies that are driven by sentiment, theyre companies that have benefitted from the bull market whats interesting though is he does make an analogy to decades past and says, socalled, super stocks of decades past nifty fiftys, in the late 1960s. Oil stocks in the 70s tnt in the late 90s what is different about the faangs versus the companies he mentioned, they have a significant moat theyre Larger Companies any startups, weve seen this with snap chat, blue apron, any startup that tries to go into that territory and disrupt those companies has seen the repercussions in their stock prices. Lets be clear. I want to make sure we make this point clear, he says, im not saying the faangs arent great or that theyll suffer such a fate, just that their elevated status is a kind of investor optimism for which we must be on the lookout. Isnt he right i dont think anyone would argue that the question is you can find value you dont have to own all of them the big difference in these companies is they dont have to go to the Capital Markets like a lot of these other bull market stocks do. Theyre flush with cash. They are growing their earnings, the ones if you look at alphabet, you look at facebook, they are growing maybe netflix and amazon, suspect on those, but the others are growing. Another noted market watcher agrees with some of howard marks points Robert Schiller joins us live from new hach. Professor, welcome back. My pleasure he even does howard marks cite your tape ratio as one of his worrying signs do you share some of his thoughts, worries . Yeah, i have for a few years now so im wondering why he came out with it right now, and that whether thats a sign that the top might be near im wrestling with that, but its just one letter, right . Listening to your panelists, it sounds like maybe there is a feeling coming up that the market is over priced. I have a on my website you can find a stock market Confidence Index where i ask both individual and Institutional Investors whether they think the market is over priced or not, and its getting high, the percent. But i dont have it on a monthly basis. Right. I dont know about right now. But you do you do think that the p. E. Ratio of the market is, in your words, questionable and that one indicator has you lying awake worried . Those are your words yeah. Well, i am wondering about what is driving this. I think that it actually relates to worries that people have that they might not bring up in discussing the stock market. I think that were at a time when people are worried about technology you talk about tech stocks, but lets just think about what technology is going to do to your job i think thats a deep underlying fear when you hear about driverless cars, crewless ships, all sorts of things taking over what waiterless restaurants taking over normal jobs i think people are worried and they want to buy tech because thats thats theyre here to theyre taking part in the thing thats threatening them. There is this deep emotional fear which is increasing, which is having the effect of pushing up prices for now, but i dont know that its come to a culmination. Im still it might go on for years like this. You i mean, theres been a sizeable sort of debate over whether were too complacent, what the vix is telling us, whether the vix is a good read of anything anymore, if it means now what it used to. Howard marks mentions complacency. My panelists mention complacency, and they have differing views on it. You also say that low volatility could be, quote, the quiet before the storm right right. So i cant do the vix in 1929 but i can talk about actual volatility in the year 1929 just before the crash volatility was pretty low. Not as low as it is now, but it was actual volatility was pretty low then it just exploded after 1929 a news story which seemed to come out of nowhere on october 28th, 29th, 1929, was the story of the crash and depression. Its surprising to many people who go back to look what triggered that crash theres nothing. The crash kind of triggered itself, but i think there may have been underlying fierce also at that time but theyre hard to find theyre hard to document. You know, i just had this thought based on something that you said this could continue, this could go on for some time doesnt mean that these fears mean that all of this is going to end. It strikes me that maybe this is marks irrational exuberance moment where he raises the concerns but yet the market and the bull market and the rally just keeps going for what could be a number of years ahead im thinking about the peak in the Housing Market that we saw in 2006. Thats a different market completely, but if you look prior to 2006, the general public search for a housing bubble in, you know, one of those news media sources in 2005, practically nobody, almost nobody said it and then in late 2005, 2006 the word started to appear i think thats when people were reassessing. I dont know that i howard marks and your panelists makes me feel that its happening again for the stock market, but i dont yet see that on a broad scale. So this might be two or three years before the peak. I dont know it doesnt feel, frankly, like there is euphoria in the market, does it . The final stage some say of the bull market. This is still in many indications at least people characterize it as an unloved or, dare i say, hated rally. Right well, i think this is not a euphoric time. Except donald trump really you go to one of his rallies and you feel like youre living in a euphoric time. Theres some of that theres an underlying fear more than in 1929 and more than in 2007 because it just seems like theres doesnt matter what job you have, theres always some robot out there about to take it. That is just relentlessly in the media. Stories of robots or robotlike things i think that is coming to a crescendo, and that is what i think is substantially driving the market professor, its jim your cyclically adjusted price of earnings ratio is often quoted recently as saying, hey, the market is over valued. Its hard to argue with where it is versus history. Let me ask you this. You must have thought of this. If youre looking for an expansion as long as weve gotten, isnt that number still being tied down at least on the earnings portion by those years coming out of the Great Recession that were punkish . Thought about it. I have a slide in my presentation showing what will happen to the ratio after the 2009 episode is ten years past so it drops out of our moving average. And, yes, it does bring the cape ratio down somewhat, but it would still be high. There was a brief period in 2008, 2009 when earnings were very low, but it was brief enough that i dont think it has a major effect on the cape ratio. Professor, this is john if i can fickthorn how do you factor in adjusted earnings given thats such a big change when you came into the concept relative to gap earnings and how do you adjust in pro form ma net earnings. I dont factor those in i have a cape ratio that i take back to 1871 thats a long time ago and ive had trouble finding accountants who can tell me how they used to do corporate earnings in 1881, 1891 the history of accounting is a very minor field in academia and there have been a lot of changes in the way earnings are done i cant claim what i have is perfect, but i think it is the result earnings through history, the method of doing earnings accounting has changed but its usually changed in response to some factor which they think is is harming the reasonableness of their earnings so i dont think the fact that theyve changed earning methods is a bad sign. I could get into details of trying to second guess sasby im not going to do that. Thanks a lot, professor. You can do that when youre going for your second nobel or Something Like that. I wish we had the time the bottom line, lets just sum it up. Marks seems to suggest this is not going to fall out of bed overnight but that the risks are elevated and theyre growing more elevated and investors seem to be blinded to many of them and they better Pay Attention today before its too late and he feels hes better to be missing a bit of the up side than, you know, over exuberant and getting caught, you know, in the ocean with his shorts down yeah. I i agree pretty much with that that doesnt mean sell everything it needs to be diversified within the u. S. , try to pursue a Value Investing approach and then be diversified outside the country and across asset classes. Thats the standard advice and then dont worry too much about it professor, really appreciate you coming in today for us this marks note certainly got us talking and we figured you were probably the best person to kick this around with we appreciate it. Okay. My pleasure. Robert shiller up at yale he also takes on bitcoin, does marks, who says it might be a pyramid scheme yet another one of these indications of how investors are chasing all of this stuff. I think some of it whacky look, as somebody who my word, not his. As somebody who has been accused at being a dinosaur in some of the things ive invested in, weve got to acknowledge, right, these ee theer yums, bitcoins, they are going to be around it is highly unlikely it is not going to be around. He said its nothing but an unfounded fad. The question is does it get regulated . The Technology Behind these that we have to look at. Five years from now its something different, but the Underlying Technology we havent had before. You guys are mostly suggesting john, it sounds from your comments you agree with some of the risks that marks discusses and shiller sort of backs up. You guys are more on the other side you say theyre still getting to be had and its too early to ill make one quick point and then ill give up. Am i right . Yes this market is broad thr expensive stocks there are cheap stocks, financials, energy, retail, technology, you can find stocks cheaper than the overall market. Not that theyre going to stay cheap forever. I think i would add to that what professor shiller was saying, stick to what your aloe ka igs is. Dont start chasing equities. You have so much money on the sideline, sarat. The whole debate is whether that cash is going to come in from the sideline how is that not a chase given where the market is now . Right now you say the markets going up but then youre telling people dont put the money in the market. What im saying is if youre out of your allocation, get back into your allocation youve had a good run for the last five years. If youre under invested in stocks if you are under invested, go for the value opportunity. Value and value with growth every look at this earnings season, scott, from the very beginning if you go back even before the financials started to kick in but you look at what oracle reported, you start looking at the financials, how they have done overall, stock, if you go each and every week through the earnings, the fundamental story is pretty strong theres a very compelling how much these beasts and how strong some of these numbers have been whether its caterpillar facebook last night, you look at those numbers. Theyre absolutely extraordinary yet people want to shoot at them. You can pick up every time a company gets amazoned, can you look last week you look at masco, lowes, all of these companies, they got killed. Today masco had great earnings, lowes is coming back. There are opportunities. People are so focused on this whole economy becoming digital and jobs getting lost. You keep saying the word people and so much of it has become passive right. Howard marks letter is to people unfortunately 10 of the flows are driven by fundamentally based investors as opposed to the etf flows. Whats interesting that he mentions is as the flows go moore towards passive investing, that will present opportunities for active investors creating bargains in the market were seeing incredible bargains of things that arent in ets 1 of ets gets half the asset flows. Theres amazing opportunity in small cap value, and the opposite is true one of the shorts, anet, is an artifice of passive investing that is not reading the news and theyre just driving the stock up because it hits the right factor. Were going to definitely get into more of that. Leslie, thanks. Leslie picker lets talk about a tale of two media stocks social media stocks. Facebook trading at alltime highs while twitter tanks. Lets bring in mark mahaney. Welcome back. Hey, scott. It really is a tale of two social meade yas today facebook what would you how would you characterize that quarter . Facebook extremely steady growth so this is the 17th straight quarter of 50 ish ad growth. Keep that number in mind when you think of this company. Yes, i think that growth rate is relatively sustainable it will fade over time gradually steadily they have new revenue monetization platforms you want to stay long facebook its our number one pick in the space and it will continue to be that by the way, on valuation you can buy this thing at 20 gap earnings for what i think is 30 to 40 sustainable growth. That makes it cheap in my book, thats why its number one in my book. Even though its up 41 over the last year, you wouldnt have to feel like youre chasing it if youre not in it. Estimates are up more than the stock is, thats why the stock has actually become cheaper. This is not a peak multiplmultie i think the valuation versus the growth versus what theyve demonstrated over, you know, four years now, i think that valuation is still theres a very constructive setup still. I get the point that its up a lot, i think the valuation versus growth, i think its one of the cheapest stocks on the growth adjusted basis in tech. What about twitter . Why was twitter at 20 bucks . Yeah. So, you know, thats one weve had a sell on. Were going to take the opposite side on this theres been some mna speculation on the stock and there was a belief that they were starting to turn the corner on user growth they may still i dont want to write them off yet. You have an under perform what do you mean you dont want to write them off . Im trying to be polite look, this company, the real question is where did the users go they certainly didnt grow they declined 2 million sequentially you know, this is sort of jarring versus the what weve heard from the company over the last few quarters, reaccelerating from users. That was a surprise. Our survey data suggested it but not with a huge amount of confidence if they cant get the user base to grow, the volatility, this one is showing ad revenues down. Its still trading 5 times sales. That combination wouldnt susz stain. Either the Revenue Growth has to reaccelerate or the revenue is going to compress. How do you get the users to grow what could the catalyst be you have a commander in chief in white house who uses this product, uses this service on a daily basis as his main communication mechanism and that cant even grow users in a meaningful way if that cant, what in the world can . Im not sure, scott youre asking the question the right way. As an average twitter user, im on there daily, i see a real nice change in how theyve presented results, theyve moved away from pure time line, made things more relevant in terms of what you missed in the past i think theyve improved the service, the problem is is there are so many people that went at that and found a deluge of data and information, its just not helpful. Its helpful to a small core of wall streeters and industry leaders. Its not mass market there may be snap chat theres definitely facebook and of course theres always google. Lets finish with amazon. If the bar was high for google and the bar was high for facebook. Yes. How high is it for amazon high for that and for netflix, too, for all of them. The one that had a real inflection in the Fourth Quarter is Netflix Facebook being up 5 isnt a dramatic move. The bar will be high the Cloud Business amazon web services, they have to sustain at 4r50es growth in that business and margins the operating margins have to expand in that sequentially you do that and i dont think theres a gab up going into the print. Thanks, scott lets trade these. Ive owned facebook for a while. I think i agree with him completely theyve got product there that are growing. Yes, they have an issue in how do you grow your advertising, but between facebook and google they control more than 80 of digital advertising. Cash flow positive i think theyre attracting more people how do you view these stocks . I dont know. I totally agree with him but it seems overwhelming whereas twitter is the ultimate clash between growth and value where they just havent selfactualized for the fact that its a new seat for smart people and theyve tapped all the smart people its not a growth margin and they should be running it to generate profit and they could is amazon right for a sell on the news you know i think that yes. I have been wrong. What were talking about with facebook is growth ratio facebook, 1. 3, thats a dina might peg ratio. Amazon, that is 5. 6. That is nosebleed. After this price, yes, its a fabulous company, growing like crazy, but youre paying a really, really expensive rate for that growth. At some point the market wises up ive been wrong. The most interesting thing was what mark said very last he said, look at the cloud see how that growth is hes talking about what that growth is. Weve already heard from microsoft. We know how strong those numbers are. Are they actually denting some of what were seeing with amazon i think it was the beginning of this week or late last you were questioning a little bit the growth potential. Right. Or rate absolutely. Because i think the competition is there and i think thats an area, and mark just pointed out, hes been right in amazon, right in netflix i always listen to what he says. Right there he said keep an eye on the aws numbers. How big can you keep growing at 40 let me ask you something. Obviously we know about aws. We are in the last six months. Isnt it the ecommerce thats moving the amazon story . Isnt that the main engine thats the main engine. Where they make money is where im looking. Lets get to seema mody. This was a deal that would have taken it private. According to sources gnc has failed to raise finances the deal the companies were discussing would have been structured as a leveraged buyout and counted as one of the largest deals in years given cas market value of 14. 6 billion. Thank you so much lets go now to sue herera who has breaking news on the case against Billy Walters. Indeed. The legendary sports gambler and the acting United States attorney general releasing this that Billy Walters has been sentenced for the 43 million Insider Trading scheme involving dean foods he was sentenced in the to five years in prison for committing Insider Trading from 2008 to 2014, principally relating to trading in the securities food company. As you might recall, basically he got some inside information, that was the allegation, from thomas c. Davis who was on the board of dean foods. Davis pled guilty to Insider Trading, perjury, obstruction of justice in may of 2016 and cooperated with the investigation. They have Just Announced that Billy Walters has just been sentenced in the 43 million Insider Trading scheme hes going to get five years in prison for that. Thank you so much believe it or not, were just getting warmed up on Halftime Report. Wall street kissing the ties and lighting the fires on boeing four upgrades today. I feel the need, the need for speed. The Market Update before our break, our data partners on what happens after facebook jumps more than 5 in one day. A month later its up 234 for more go to cnbc. Com. Halftime report with scott wapner and the traders is back in two minutes were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. Want to show you the markets this hour. There is your nasdaq turning a bit lower off the better levels of the day still up nearly 7 points theres the s p, a similar move there as well. Welcome back to halftime boeing is going up its following strong earnings, of course, for positive analysts call today jim, we talked go these yesterday. These calls are late the stock is at an alltime high. Yeah. But okay. So you know i was in the stock and i made a good 80 in it. This is emblematic of what howard marks is saying i got out early, okay . I dont feel any sadness about that, but i do note the stocks at 235 at this price its priced for perfection youve got to assume nothing goes wrong, no further delays on the pegasus tanker, there are no order cancellations in the 777x. Boeing is doing a great job. Thats almost all boeing but the price you pay matters. At 20 times this years earnings its priced for perfection. Literally as youre saying all of this, all im thinking about is the marks memo. Yeah. And you said, hey, why get out now . No. No no. Another 10 . I think you missed my point Scott Scott Scott i think you why is everybody else laughing i think you missed my point look, what i said was first thing i said was i think howard marks is right, but i think you can still ride this until it rolls over. If one thing goes wrong yeah. Exactly. Is that emblematic of the overall market itself . Look, on boeing no, it is not. Ill tell you why. The overall market, weve got to stop painting the overall market with the broad brush stroke. Agree. Amazon is not the same as intel. Were not talking about that its not the same multiple if you look at a peg ratio, different companies. There are ways if you look the whole name of this game is buy low and sell high. There are places to buy low here what . Look, if you look at boeing, its a cyclical stock. They are running they should be trading at 15 to 16 times earnings. 20 to 25 there is definitely a lot of money chasing these things what marks was saying, yeah, they could have more up side but the down side is when you see growth slow in emerging markets in europe, youll see moredown side one aspect of boeing, Free Cash Flow value. When you look at that, its trading at 13 times, pierce are trading at 7 times everybody looks at pe. They love the cash generation. The cash generation something with a lot of cash was pulled in this quarter from defer rens and customer advances thats not really cash. Overall, take a look at how theyve shrugged their share count over the last decade you start to look at a company, this isnt financial engineering. Theyre buying back and have cash flows that are incredible. Sue herera has the latest headlines. I do. Thank you very much. Overseas in brittain where a british judge has ruled that critically ill infant charlie gard will move to hospice to spend the final hours of his looif before a ventilator will be turned off. Charlies parents wanted to take him home but the hospital said that was impractical and as a result of that he will be sent to hospice clashes erupting at a contested jerusalem shrine after it reopened today. Several people reported injured. Thousands of muslim worshippers had flocked to that site after israel removed security Equipment Installed after a deadly july 14th attack. Venezuelas opposition continues as a 48 hour strike is underway to protest against president maduros plan to rewrite that constitution. Homemade barricades blocking some streets in the capital. Maduro was planning a sunday vote to begin the constitutional process. A big night for team u. S. A. As they beat jamaica with the score tied 11 late in the game, jordan morris scored the winning goal to give the u. S. Its first cup win since 2013 you are up to date and im going to send it over to brian for whats coming up on power lunch. In 18 months jordan morris has won a college championship, mls championship and now the concaf cup. If you invested 1,000 bucks in twitter or 1,000 bucks in facebook in 2013, how much money would you have or not have were going to let you know. Plus, the badger state getting a big win. Are those jobs going to come to wisconsin . The promise of 10 billion, well find out if they are really, indeed, optimistic amazon shareholders, youve been soaring but is washingtons war on amazon going to turn into more than just words well find out a lot more to do on power lunch. Send it back to scott. Pete tracks unusual activity in the Airlines Sector what stocks are you going to see . Plus, in todays blitz the training is on biligio, and we are arg dgntneinjume day for Martin Shkreli well have the latest there. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley give you a market check now. You can see how the nasdaq has gone negative. It is now down by 9 points really a steady stream since the top of the noon hour there is the s p 500 which is also in the red. D Dow Jones Industrial average up. Pete najerian, what do you see good to see you, scott. When you start seeing an entire sector start to get bought up, that makes it pretty interesting, very interesting day for me delta, southwest, american all being hit with very aggressive call buying. All of them getting bought in the august everything is very, very short term lets remember that. You start off with southwest huge call buying coming into southwest. These august 65 calls. When i first shot this to the guys it was about 9,000. Now you can see were starting to approach close to 14,000 calls being bought there in southwest. Then did you to delta. The august 50 calls. When i shot this to them it was about 10,000 its a little bit more than that number now very aggressive buying there as well on the august 50s these are right at the money then american airlines, similar story. In delta, that was a call spread selling the 52. 5 against the 50s. American, very aggressive buying as well. You see, all three of these, scott, being very aggressively bought im going to give you a quick bonus. They came out a half hour ago, jetblue aggressive call buying theyre going out to december. So four different stocks in the same sector where were seeing up side call buying. Im in delta i actually added jetblue just a little while ago. Good stuff. Pete, thanks come on back over here. Lets switch gears talking about health care. As stra zen neck ka and Martin Shkrelis case Closing Arguments in that case are currently underway meg . Reporter hey, scott. Lies upon lies upon lies, that is how the prosecution started its Closing Arguments in the trial. They are in the third hour of the Closing Argument detailing how they say shkreli allegedly defrauded investors to induce them to invest in the hedge fund they wonder if its going to resonate with the jury well have to wait and see about that later this afternoon we are expecting the defense will make the Closing Arguments. Then the prosecution has the opportunity to rebut that and then it will go to the jury. Maybe the jury deliberations will start tomorrow. Well bring you anymore updates. Defenses Closing Arguments are bound to be dramatic if its like the opening statements. Another story in pharma negative results for an as stra senica story its a combination study of two drugs aimed to treat lung cancer a hot area of immunotherapy. That didnt meet the goals the stock is under pressure. Shares of bristolmyers is working oen a similar combination. We should see some data over the next few months and next queer some investors reading into bristolmyers from astrazenecas results. Merck is up. Lots of news in pharma. Lets get to seema mody. A stock that is on the move big time right now seema . That is right now, scott. Take a look at adt bill akman is building a stake in Automatic Data Processing and as a result were looking at the stock up 10 as a Software Company that focuses on Human Resources technology back to you. Seema, thanks john, your hands are up in the air on this one. No opinion. No opinion no involvement okay. What do you think about this if it is true in adp . Ackman has been doing better recently in his fund than he has been in the last two years sold out of valeant. It continues to go against him. It will. Chipotle is still a problem i hear what youre saying. He could use a win i think adp is a pretty safe bet. You have the labor markets improving seemingly with every report and that should do well for adp. It seems safe. Adp is an Interesting Company because paychecks, adp, you buy them for the cash. Thats where they make money on the flow i guess this is a bet that you think Interest Rates are going up pretty rich company. They trade at premiums on the market. Gold is hitng ati sixweek high and breaking a threeday losing streak. Well go to the future pit next for those trades when the Halftime Report comes back. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Welcome back to the half time report, im jackie det angel angelis. Yellow metals has its first positive right now when it was at 1200 we have 16 so right now. A lons nice gradual channel higher. 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The last few minutes, theres a spike in adidas, up 3 , they raised their guidance peak, you love this name love this name. Its one of the best in the space. We talk about under armour and nike, we dont talk about as much about adidas. This brand has the Global Presence just sold off ccm, the hockey entity, to the private equity. A couple minutes left, lets do a new short of yours or two arista networks. Arista is fascinating anet. A high momentum stock, one of the most expensive hardware stocks in the market trades at nine times sales, 40 plus times earnings. Switches just like cisco but to the hyperscale market. So when youre competing against cisco, its rich what is interesting ive got a big dispute with cisco. Cisco, basically the ceo told his company to cisco he created the patents and he started arista that did the same thing and so cisco, john chambers, this is personal he is the guy even leading the charge even not a ceo saying im going to put these guys out of business this isnt a licensing suit. So its gone up, its been years in the courts at the itc, they lost both patents, they ended up getting a work around called the 944 patent and now we have the 945 patent they dont get a work around on july 25, they get further shot down on their appeal so now they have not been selling their products, any of them, in the u. S. Since july 3. Thats 75 of their revenue, maybe 12 excluded from microsoft. Theyre supposed to be doing 30 year over year growth. When they report on august 3, you could be looking at minus 20 then youll see multiple compression because i have news for the street this is an existential threat to these guys business. We reached out to them and havent heard become but well continue to follow that story. Well continue to follow your other positions as well and have you back in a bit to do that lets do final trades. Ill give you a city, deutsche bank. Theyre seeing call buying in all these financials intel is a sleeper, long. That does it for us thank you power lunch starts right now. Welcome, im Tyler Mathisen and here is what a is on our foodless menu today. A social showdown on the street. Twitter shares plummeting, facebook surging, now a 500 billion company. The battle for your eyeballs straight ahead foxconn and the Trump Administration getting a lot of atta boys on the announcement of a 10 billion deal to build a plant and add thousands of jobs in southeastern wisconsin but will this be a boost for bluecollar workers . Well ask the head of the Wisconsin Manufacturing Association plus there is a new richest ma